Contents
Judgment of the Court (Fourth Chamber)12 December 2024note(Reference for a preliminary ruling — Article 63 TFEU — Free movement of capital — Article 17 of the Charter of Fundamental Rights of the European Union — Right to property — Right of usufruct over agricultural land — National legislation extinguishing, without compensation, the rights of usufruct — Judgment establishing a failure to fulfil obligations — Reinstatement in the land register of a previously deleted right of usufruct, without examination of the lawfulness of the original registration — Finality of the original registration)In Case C‑419/23,REQUEST for a preliminary ruling under Article 267 TFEU from the Győri Törvényszék (Győr High Court, Hungary), made by decision of 21 June 2023, received at the Court on 6 July 2023, in the proceedingsCNvNemzeti Földügyi Központ,intervening parties:GW,THE COURT (Fourth Chamber),composed of K. Lenaerts, President of the Court, acting as President of the Fourth Chamber, C. Lycourgos (Rapporteur), President of the Third Chamber, S. Rodin, N. Jääskinen and O. Spineanu-Matei, Judges,Advocate General: J. Kokott,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– the Hungarian Government, by Zs. Biró-Tóth, M.Z. Fehér and K. Szíjjártó, acting as Agents,– the European Commission, by M. Mataija, A. Tokár and G. von Rintelen, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 11 July 2024,gives the following
Judgment
1This request for a preliminary ruling concerns the interpretation of Article 63 TFEU and of Article 17 of the Charter of Fundamental Rights of the European Union (‘the Charter’).
2The request has been made in proceedings between CN and Nemzeti Földügyi Központ (National Land Centre, Hungary) concerning the lawfulness of the decision by which that authority reinstated in the land register the right of usufruct held by GW over agricultural land belonging to CN.
Legal context
European Union law
3Article 63(1) TFEU provides:‘Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited.’
4Article 17(1) of the Charter provides:‘Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law in so far as is necessary for the general interest.’
Hungarian law
The Civil Code
5Under Paragraph 5:147(1) of the Polgári Törvénykönyvről szóló 2013. évi V. törvény (Law No V of 2013 on the Civil Code), the right of usufruct entitles the usufructuary to possess, use, exploit and collect revenue from a thing owned by a third party.
Government Decree No 171/1991
6Paragraph 1(5) of 171/1991 Korm. rendelet (Government Decree 171/1991) of 27 December 1991, which entered into force on 1 January 1992, precluded the acquisition of productive land by persons not having Hungarian nationality, with the exception of persons in possession of a permanent residence permit and those with refugee status.
The 1994 Law on Productive Land
7The a termőföldről szóló 1994. évi LV. törvény (Law No LV of 1994 on Productive Land; ‘the 1994 Law on Productive Land’) maintained the prohibition on acquisition referred to in the preceding paragraph and extended it to legal persons, whether or not they were established in Hungary.
8That law was amended, with effect from 1 January 2002, by the a termőföldről szóló 1994. évi LV. törvény módosításáról szóló 2001. évi CXVII. törvény (Law No CXVII of 2001 amending Law No LV of 1994 on Productive Land) in order also to preclude a right of usufruct over productive land from being created by contract in favour of natural persons not possessing Hungarian nationality or legal persons.
9Following those amendments, Paragraph 11(1) of the 1994 Law on Productive Land provided that ‘for the right of usufruct and the right of use to be created by contract, the provisions of Chapter II regarding the restriction on the acquisition of property must be applied. …’.
10Paragraph 11(1) of the 1994 Law on Productive Land was subsequently amended by az egyes agrár tárgyú törvények módosításáról szóló 2012. évi CCXIII. törvény (Law No CCXIII of 2012 amending certain laws on agriculture). In the new version resulting from that amendment, which entered into force on 1 January 2013, Paragraph 11(1) provided that ‘the right of usufruct created by a contract shall be null and void, unless it is created for the benefit of a close relation’.
11Law No CCXIII of 2012 amending certain laws on agriculture also introduced into the 1994 Law on Productive Land a new Paragraph 91(1), in accordance with which ‘any right of usufruct existing on 1 January 2013 and created, for an indefinite period or for a fixed term expiring after 30 December 2032, by a contract between persons who are not close members of the same family shall be extinguished by operation of law on 1 January 2033’.
Law No CXXII of 2013 on transactions in agricultural and forestry land
12The mező- és erdőgazdasági földek forgalmáról szóló 2013. évi CXXII. törvény (Law No CXXII of 2013 on transactions in agricultural and forestry land) was adopted on 21 June 2013 and entered into force on 15 December 2013.
13Paragraph 37(1) of that law maintains the rule that a right of usufruct or a right of use over such land created by contract is to be null and void unless it was created for the benefit of a close member of the same family.
The 2013 Law on Transitional Measures
14The mező- és erdőgazdasági földek forgalmáról szóló 2013. évi CXXII. törvénnyel összefüggő egyes rendelkezésekről és átmeneti szabályokról szóló 2013. évi CCXII. törvény (Law No CCXII of 2013 laying down various provisions and transitional measures concerning Law No CXXII of 2013 on transactions in agricultural and forestry land; ‘the 2013 Law on Transitional Measures’) was adopted on 12 December 2013 and entered into force on 15 December 2013.
15In the version thereof relevant to the dispute in the main proceedings, Paragraph 108(1) provided:‘Any right of usufruct or right of use existing on 30 April 2014 and created, for an indefinite period or for a fixed term expiring after 30 April 2014, by a contract between persons who are not close members of the same family shall be extinguished by operation of law on 1 May 2014.’
16Under the 2021 Law No CL amending certain agricultural laws, a chapter 20/F was inserted into the 2013 Law on Transitional Measures. That chapter, which includes the new Paragraphs 108/B and 108/F, is entitled: ‘Specific provisions to implement [the judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432)] delivered by the Court of Justice of the European Union on the extinguishment by operation of law of rights of usufruct over agricultural land’. It entered into force on 1 January 2022.
17Paragraph 108/B(1) of the 2013 Law on Transitional Measures, as amended by the 2021 Law No CL amending certain agricultural laws, provides:‘Any natural or legal person whose right of usufruct has been deleted from the land register by virtue of the provisions of Paragraph 108(1) hereof in force on 30 April 2014 …, or a successor in title to that person, may apply under this chapter to have the deleted right of usufruct reinstated in the land register and for any compensation to which that person is entitled under this chapter.’
18Paragraph 108/F(6) to (8) of that law, as amended by the 2021 Law No CL amending certain agricultural laws, provides:6.A declaration should be made that the deleted right of usufruct may be reinstated where:(a) any of the persons referred to in subparagraph 7 is not considered to be in good faith; and(b) there is no legal obstacle within the meaning of subparagraph 8.7.The following persons shall be considered not to be in good faith:(a) the owner, if that person still held a property right over the property when the right of usufruct was deleted;(b) the owner, where that person’s property right arose, either under a contract concluded after 6 March 2018 or before that date if it was submitted to the competent authority after 6 March 2018 in a procedure provided for by [Law No CXXII of 2013 on transactions in agricultural and forestry land] (including the procedure for registration in the land register), or by a disposition on death occurring after 6 March 2018;(c) the owner whose property right was acquired after 6 March 2018 (otherwise than by contract or inheritance);(d) the owner deemed to be in good faith in accordance with point (b) or (c), but who has created a right of usufruct over the property after 6 March 2018;(e) the usufructuary whose right of usufruct over the property was created by a contract or disposition on death after 6 March 2018 or who preserved that right at the time of transfer of the property right held over the property after that date;(f) the owner who acquired the property right over the property by inheritance from one of the owners referred to in points (a) to (d).8. The fact that the property has been expropriated or, in lieu and stead thereof, the property right thereover has been transferred by a contract of sale shall be deemed to be a legal obstacle to reinstatement.’
The Law on the land register
19Paragraph 94 of the ingatlan-nyilvántartásról szóló 1997. évi CXLI. törvény (Law No CXLI of 1997 on the land register; ‘the Law on the land register’) provided:1. With a view to the deletion from the land register of rights of usufruct and rights of use extinguished under Paragraph 108(1) of [the 2013 Law on Transitional Measures] (for the purposes of this paragraph referred to collectively herein as the “rights of usufruct”), the natural person holding rights of usufruct shall, in response to a notice sent on 31 October 2014 at the latest by the authority responsible for administering the land register, within 15 days of the delivery of such notice declare, using the form prescribed for that purpose by the Minister, the existence, as the case may be, of a close family relationship with the person shown as owner of the property in the document which served as the basis for registration. Where no declaration is made within the prescribed period, no application for continuation shall be accepted after 31 December 2014.…3. If the declaration does not reveal a close family relationship, or if no declaration has been made within the prescribed period, the authority responsible for administering the land register shall of its own motion delete the rights of usufruct from the register within six months following the expiry of the deadline for making the declaration and no later than 31 July 2015.…’
The dispute in the main proceedings and the question referred for a preliminary ruling
20On 30 December 2001, the company Readiness Kft. and GW signed a contract of usufruct over an agricultural plot of land belonging to that company and situated in the territory of the municipality of Kőszeg (Hungary). GW’s right of usufruct was registered in the land registry by decision of 29 January 2002 and was not contested.
21CN’s document of title to that property was registered on 18 May 2012.
22On 27 July 2015, the Vas Megyei Kormányhivatal Szombathelyi Járási Hivatal (Szombathelyi District Registry – Vas Region Administrative Department, Hungary) deleted GW’s right of usufruct from the land register in accordance with Paragraph 108(1) of the 2013 Law on Transitional Measures and Paragraph 94(1) and (3) of the Law on the land register, on the ground that GW was not a close relation of the owner of the plot of agricultural land concerned.
23By judgment of 6 March 2018, SEGRO and Horváth (C‑52/16 and C‑113/16, EU:C:2018:157), the Court held that Article 63 TFEU must be interpreted as precluding national legislation under which rights of usufruct which have previously been created over agricultural land and the holders of which do not have the status of close relation of the owner of that land are extinguished by operation of law and are, consequently, deleted from the property registers.
24By judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432), the Court held that, by adopting Paragraph 108(1) of the 2013 Law on Transitional Measures and thereby cancelling, by operation of law, the rights of usufruct over agricultural and forestry land located in Hungary that were held, directly or indirectly, by nationals of other Member States, Hungary had failed to fulfil its obligations under Article 63 TFEU and Article 17 of the Charter.
25On 30 November 2022, pursuant to Paragraphs 108/B and 108/F of the 2013 Law on Transitional Measures, as amended by the 2021 Law No CL amending certain agricultural laws, the National Land Centre ordered the reinstatement of GW’s right of usufruct in the land register, stating that CN could not be considered to be in good faith within the meaning of Paragraph 108/F(7) of that law because she had been the owner of the plot of agricultural land in question when the right of usufruct had been deleted from the land register.
26CN brought an action before the referring court seeking annulment of that reinstatement decision, on the ground that GW’s right of usufruct had been unlawfully registered in the land register on 29 January 2002. Paragraph 11(1) of the 1994 Law on Productive Land, as applicable on that date, did not permit registration of a right of usufruct over a plot of agricultural land in the land register after 1 January 2002 where that right of usufruct was created in favour of a natural person who was not a Hungarian national.
27The National Land Centre and GW found that that action should be dismissed on the ground that there was no legal obstacle to the reinstatement of the right of usufruct in question in the land register and that the 2013 Law on Transitional Measures, as amended by the 2021 Law No CL amending certain agricultural laws, does not require an examination of whether the original registration of the right of usufruct in that register was lawful.
28As a preliminary point, the referring court states, first of all, that CN is resident in Germany and that real estate investments made in the territory of a Member State by persons not resident in that Member State come within the scope of Article 63 TFEU. It observes, next, that GW’s right of usufruct over the plot of agricultural land at issue in the main proceedings was created not by CN, but by the previous owner of that plot of land and that, consequently, it could not be said that CN acted in bad faith. Lastly, that court observes that, by reason of the deletion of GW’s right of usufruct from the land register, CN enjoyed full property rights over that plot of land until the reinstatement of that right of usufruct. Moreover, following the deletion of GW’s right of usufruct from the land register, CN could legitimately believe herself to be entitled to make unencumbered use of the plot of land in question and expect an increase in the value of it.
29In the light of those clarifications, the referring court states, first of all, that Paragraph 11(1) of the 1994 Law on Productive Land prohibited, as from 1 January 2002, the creation of a right of usufruct over productive land in favour of persons who are not Hungarian nationals. Moreover, according to national case-law, that provision further precluded such a right from being registered in the land register after that date, even if the contract of usufruct had been concluded previously.
30In the present case, GW’s right of usufruct over the plot of agricultural land at issue in the main proceedings was created by virtue of a contract concluded on 30 December 2001, although that right was registered only on 29 January 2002. As a result, according to the referring court, the registration of that right of usufruct in the land register was unlawful. The registration decision nevertheless became final because it was not contested.
31In the second place, the referring court observes that the decision to reinstate GW’s right of usufruct in the land register was taken on the basis of Paragraphs 108/B and 108/F of the 2013 Law on Transitional Measures, as amended by the 2021 Law No CL amending certain agricultural laws, which were adopted to give effect to the judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432).
32According to Paragraph 108/F(6) of the 2013 Law on Transitional Measures, a previously deleted right of usufruct may be reinstated in the land register where the owner or usufructuary is not considered to be in good faith under Paragraph 108/F(7).
33Under that latter provision, the usufructuary is to be considered in bad faith only where that person’s right of usufruct over the property was created by virtue of a contract or disposition on death occurring after 6 March 2018 or where, in a transaction transferring a property right after that date, the transferor reserved a right of usufruct over the property. On the other hand, the usufructuary is not deemed to be in bad faith where that person’s right of usufruct was registered in the land register in contravention of the national legislation applicable on the date of that registration.
34The referring court takes the view that, in paragraph 112, 117 and 122 of the judgment of 6 March 2018, SEGRO and Horváth (C‑52/16 and C‑113/16, EU:C:2018:157), the Court required the introduction of a national procedure comprising an examination on a case-by-case basis of the lawfulness of rights of usufruct registrations.
35In the third place, that court considers that it follows from the judgment of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175) that an administrative decision that has become final, such as the registration of GW’s right of usufruct in the land register, cannot prevent the national court from taking all measures necessary to ensure the effectiveness of EU law when due compliance with the principle of legal certainty would undermine the principles of effectiveness of EU law and sincere cooperation.
36In the present case, the referring court takes the view that, in view of the principle under which the right of usufruct can be deleted only where the national courts having jurisdiction are able to conduct an examination on a case-by-case basis of the lawfulness of the original registration, it should find that the original registration of GW’s right of usufruct in the land register was unlawful and, consequently, that the reinstatement of that right of usufruct was improper. However, Paragraph 108/F(7) of the 2013 Law on Transitional Measures, as amended by the 2021 Law No CL amending certain agricultural laws, prohibits it from conducting such an examination.
37It was in those circumstances that the Győri Törvényszék (Győr High Court, Hungary) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:‘Must Article 63 [TFEU] and Article 17 of the [Charter] be interpreted as meaning that they do not preclude legislation of a Member State that, on reinstatement of a [right of usufruct], ordered following proceedings for failure to fulfil obligations – subsequent to the deletion of a [right of usufruct] whose registration was unlawful but final – does not provide for a mandatory examination of whether the [right of usufruct] was registered lawfully?’
Consideration of the question referred
Admissibility
38The Hungarian Government disputes the admissibility of the question referred on the ground that the provisions of EU law the interpretation of which is sought by the referring court are unrelated to the dispute before it. Thus, first, the national legislation at issue in the main proceedings is applicable without distinction and does not dissuade non-residents of Hungary from maintaining their investments there. Second, the applicant in the main proceedings acted in bad faith and EU law may not be relied on in order to justify improper conduct.
39In that regard, it should be borne in mind that, where it is not obvious that the interpretation of a provision of EU law bears no relation to the facts of the main action or its purpose, the objection alleging the inapplicability of that provision to the case in the main action does not relate to the admissibility of the request for a preliminary ruling, but concerns the substance of the questions raised (judgment of 24 July 2023, Lin, C‑107/23 PPU, EU:C:2023:606, paragraph 66 and the case-law cited).
40It is not obvious that Article 63 TFEU and Article 17 of the Charter are inapplicable to the dispute in the main proceedings. It is apparent from the order for reference that the plot of agricultural land at issue in the main proceedings is the property of CN, who resides in a Member State other than Hungary. The facts of the dispute in the main proceedings are, therefore, not confined to within a single Member State.
41Moreover, even if were established that the applicant in the main proceedings intends, in reality, to rely on EU law in order to justify an abusive legal practice, that concerns a substantive aspect of the case and has no bearing on the admissibility of the question referred.
42The question referred is accordingly admissible.
Substance
43By its question, the referring court asks, in essence, whether Article 63 TFEU and Article 17 of the Charter must be interpreted as precluding legislation of a Member State under which the right of usufruct over a plot of agricultural land situated on the territory of that Member State which, after having been registered definitively in the land register, has been cancelled and deleted from that register by effect of legislation of that Member State contrary to those articles, must, at the request of the person who has been deprived of that right, be reinstated in that register, even when the original registration of that right was in contravention to the applicable national legislation on the date of that registration.
Preliminary observations
44In the first place, as indicated in paragraph 20 of the present judgment, on 30 December 2001 GW concluded a contract of usufruct with a company governed by Hungarian law which was owner of the plot of agricultural land before that property was transferred to CN. That right of usufruct was registered in the land register on 29 January 2002.
45The referring court takes the view that, although the contract of usufruct concluded by GW was legal on the date it was concluded, its registration in the land register was nevertheless unlawful on the ground that it was effected after 1 January 2002.
46It states that the creation of a right of usufruct over that agricultural land in favour of non-Hungarian nationals was forbidden as from 1 January 2002 due to an amendment to Paragraph 11(1) of the 1994 Law on Productive Land made by Law No CXVII of 2001, referred to in paragraph 8 of the present judgment. Hungarian courts have interpreted that provision as meaning that a right of usufruct over that land in favour of a foreign national, even if created before 1 January 2002, could no longer be registered in the land register as from that date.
47In the second place, it should be noted, first, that on 27 July 2015, GW’s right of usufruct was deleted from the land register under Paragraph 108(1) of the 2013 Law on Transitional Measures, on the ground that the person concerned was not a close relation of the owner of the plot of agricultural land.
48By its judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432), however, the Court held that, by adopting Paragraph 108(1) of the 2013 Law on Transitional Measures, Hungary had failed to fulfil its obligations under Article 63 TFEU and Article 17 of the Charter.
49Following that judgment, the Hungarian legislature amended the 2013 Law on Transitional Measures in order to permit, under certain conditions, the reinstatement of rights of usufruct in the land register that had been deleted pursuant to Paragraph 108(1) of that law.
50Under that new legislation, on 30 November 2022, GW obtained reinstatement of his rights of usufruct in the land register.
51Second, it is possible to infer from the order for reference that GW’s right of usufruct comes within the scope of Article 63 TFEU inasmuch as the person concerned is a national of a Member State other than Hungary. It is accordingly appropriate to answer the question referred on the basis of that premiss, which it is nevertheless for the referring court to verify.
52In the third place, the Court has held that the reinstatement in the land register of the rights of usufruct cancelled contrary to Article 63 TFEU is the most appropriate way of restoring the legal and factual situation in which the person concerned would have found himself had his rights not been cancelled unlawfully, at least with prospective effect. However, in specific cases, objective and legitimate obstacles, in particular those of a legal nature, may preclude such a measure, in particular where, since the cancellation of the rights of usufruct, a new owner has acquired in good faith the land affected by the rights concerned or where that land has been restructured. It is only in the event that such reinstatement proves impossible that it would be necessary, in order to nullify the unlawful consequences of the infringement of EU law, to grant the former holders of the cancelled rights of usufruct the right to compensation, whether financial or other, the value of which would be capable of making financial reparation for the economic loss arising from the cancellation of those rights (see, to that effect, judgment of 10 March 2022, Grossmania, C‑177/20, EU:C:2022:175, paragraphs 66 and 68).
53In the light of those clarifications, it must be determined whether Article 63 TFEU and Article 17 of the Charter preclude a right of usufruct over a plot of agricultural land situated in Hungary from being reinstated in the land register at the request of a person who has been deprived of those rights when the owner of that plot of land does not reside in Hungary and that usufruct was originally registered in that register in contravention of the applicable national legislation on the date of that registration.
Whether there is a restriction on the free movement of capital
54Article 63(1) TFEU generally prohibits restrictions on movements of capital between Member States (judgment of 6 March 2018, SEGRO and Horváth, C‑52/16 and C‑113/16, EU:C:2018:157, paragraph 61 and the case-law cited).
55The transactions by which non-residents effect real estate investments on the territory of a Member State come within the scope of movement of capital within the meaning of Article 63 TFEU. That notion encompasses, inter alia, investments in real estate involving, as in the present case, the acquisition of property rights over agricultural land (see, to that effect, judgment of 6 March 2018, SEGRO and Horváth, C‑52/16 and C‑113/16, EU:C:2018:157, paragraphs 56 and 57, and of 18 January 2024, JD (Residence requirement), C‑562/22, EU:C:2024:55, paragraphs 30 and 31).
56Moreover, a national provision which applies without distinction may constitute a restriction on the free movement of capital if it is such as to affect the position of an investor, particularly when it is liable to deter investors from other Member States from making or maintaining an investment in the Member State concerned (see, in that regard, inter alia, judgments of 4 June 2002, Commission v France, C‑483/99, EU:C:2002:327, paragraphs 38 to 42; of 13 May 2003, Commission v Spain, C‑463/00, EU:C:2003:272, paragraphs 54 to 62; of 10 November 2011, Commission v Portugal, C‑212/09, EU:C:2011:717, paragraph 65; and of 8 May 2013, Libert and Others, C‑197/11 and C‑203/11, EU:C:2013:288, paragraphs 64 to 66).
57In the present case, the order for reference indicates that CN is resident in Germany and that the legislation at issue in the main proceedings imposes, for the benefit of third parties, the reinstatement of rights of usufruct over plots of agricultural land situated in Hungary, including the land belonging to CN, which reduces the value of that land and limits the ability of the landowners, including those resident in other Member States, to have enjoyment of the property in which they invested capital to acquire.
58Such legislation accordingly constitutes a restriction on the fundamental freedom guaranteed in Article 63 TFEU (see, by analogy, judgment of 6 March 2018, SEGRO and Horváth, C‑52/16 and C‑113/16, EU:C:2018:157, paragraph 64).
Whether there is a justification
59A measure which restricts the free movement of capital is permissible only if it is justified by the reasons referred to in Article 65 TFEU or by overriding reasons in the public interest and observes the principle of proportionality, which requires the measure to be appropriate for ensuring the attainment of the objective legitimately pursued and not to go beyond what is necessary in order for it to be attained (judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraphs 59 and 60).
60In addition, it should be borne in mind that the fundamental rights guaranteed by the Charter are applicable in all situations governed by EU law and that they must, therefore, be complied with inter alia where, as in the present case, national legislation is such as to obstruct one or more of the fundamental freedoms guaranteed by the FEU Treaty and the Member State concerned relies on grounds envisaged in Article 65 TFEU, or on overriding reasons in the public interest that are recognised by EU law, in order to justify such an obstacle. In such a situation, the national legislation concerned can, according to settled case-law, fall within the exceptions thereby provided for only if it complies with the fundamental rights the observance of which is ensured by the Court (see, to that effect, judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraphs 63 and 64 and the case-law cited).
61In the present case, it is apparent, in the first place, from the order for reference that the legislation at issue in the main proceedings is intended to give effect to the judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432), by which the earlier Hungarian legislation was held to be contrary to Article 63 TFEU and Article 17 of the Charter, by reinstating the rights of usufructuaries who, like GW, had been deprived of those rights in a manner contrary to those articles.
62It should be noted that such an objective constitutes an overriding reason in the public interest.
63It should be noted in that regard that, under Article 260(1) TFEU, if the Court finds that a Member State has failed to fulfil its obligations under the Treaties, that Member State is required to take the necessary measures to comply with the judgment of the Court which has the force of res judicata as regards the matters of fact and law actually or necessarily settled by the judicial decision in question. Thus, the Hungarian legislature was required to amend the provisions of national law held to be contrary to EU law by such a judgment (see, to that effect, judgment of 10 March 2022, Grossmania, C‑177/20, EU:C:2022:175, paragraphs 35 and 36).
64As regards, in the second place, compliance with the principle of proportionality, it should be borne in mind, first, that national legislation is appropriate for ensuring attainment of the objective relied on only if it genuinely reflects a concern to attain it in a consistent and systematic manner (judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraph 61). There is nothing in the present case to suggest that the legislation at issue in the main proceedings is not appropriate for reinstating the rights enjoyed by the usufructuaries concerned under EU law.
65Second, such legislation does not seem to go beyond what is necessary in order to attain such an objective, which it is nevertheless for the referring court to verify.
66Thus, as recalled in paragraph 52 of the present judgment, it is only where there are objective and legitimate obstacles to the reinstatement of the right of usufruct in the land register that the award of compensation to the former holder of the rights, in lieu and stead of that reinstatement, may be considered as restoring the rights enjoyed under EU law to the person concerned. The fact that the original registration of GW’s right of usufruct in the land register was, according to the referring court, in contravention of Paragraph 11(1) of the 1994 Law on Productive Land, in the version thereof applicable on the date of that registration, does not constitute such an objective and legitimate obstacle.
67In that regard, it follows, first of all, from the order for reference itself that the contract of usufruct at issue in the main proceedings was concluded in compliance with the legal provisions applicable on the date of its creation, which is a factor to be taken into consideration (see, by analogy, judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraphs 73 to 75). Only the registration of those rights of usufruct in the land register could be considered unlawful on the basis of a case-law interpretation of Paragraph 11(1) of the 1994 Law on Productive Land, as applicable on the date of registration of GW’s right of usufruct in the land register. A Member State is free to adopt legislative provisions under which it decides that such an irregularity, resulting from its national law, no longer needs to be sanctioned.
68Next, it should be borne in mind that the right of usufruct at issue in the main proceedings was indeed registered in the land register on 29 January 2002 and that that registration had become definitive. Under Hungarian law, the consequence of such registration was that the right of usufruct concerned existed until there was proof to the contrary (see, to that effect, judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraph 79). Similarly, it is common ground that GW was able to have unfettered enjoyment of that right until 27 July 2015. Consequently, the principle of legal certainty also weighs in favour of reinstatement of GW’s right of usufruct, even though the original registration in the land register could be regarded as unlawful (see, to that effect, judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraph 80).
69Moreover, such an illegality, committed at the time of the original registration of the rights of usufruct in the land register, could have been the subject of sanctions that were less invasive on the rights of the usufructuary, if the Hungarian authorities had demonstrated greater diligence by eliminating that illegality ab initio (see, to that effect, judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraph 108).
70Moreover, as observed by the Advocate General in points 66 to 68 of her Opinion, CN’s property rights were not affected disproportionately by the legislation at issue in the main proceedings. In fact, the only consequence of that legislation is the restoration of CN in the rights she had acquired from the former landowner of the plot of agricultural land at issue in the main proceedings, the right of usufruct created in favour of GW over that plot of land having been definitively registered in the land register before the date on which CN became the landowner thereof.
71Lastly, it is true, as observed by the referring court, that the Court has held that an examination on a case-by-case basis of the conditions under which the rights of usufruct had been created would have been a more proportionate measure for attaining the objective of combating abusive practices in the field of acquisition and operation of agricultural land than the decision by the Hungarian legislature to cancel, by operation of law, the rights of usufruct held by persons other than close relations of the owner of the plot of agricultural land concerned (see, to that effect, judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraphs 115 to 119). That said, it in no way follows from such an assessment that it is transposable to a situation where the legislature decides to reinstate such rights in the land register with a view not to combat those abusive practices, but rather to ensure observance of rights enjoyed by individuals under EU law.
72In the third place, as observed in paragraph 60 of the present judgment, it is still necessary to examine whether the right to property, as guaranteed by Article 17 of the Charter, is such as to preclude legislation such as that at issue in the main proceedings.
73In that regard, under Article 17(1) of the Charter, everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions and no one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss.
74The use of property may be regulated by law in so far as is necessary for the general interest. Moreover, under Article 52(1) of the Charter, there may be limitations on the exercise of the rights and freedoms recognised thereby, such as the right to property, provided that those limitations are provided for by law, respect the essence of those rights and freedoms and, subject to the principle of proportionality, are necessary and genuinely meet objectives of general interest recognised by the European Union or the need to protect the rights and freedoms of others.
75Although there is nothing to suggest that CN’s rights as landowner of the plot of agricultural land at issue in the main proceedings were not acquired lawfully within the meaning of Article 17(1) of the Charter, the same cannot be said of the transaction by which CN acquired full property rights thereover, due to the deletion of the registration of GW’s right of usufruct over that land from the land register. As is apparent from paragraph 61 of the present judgment, that transaction was completed in a manner contrary to Article 63 TFEU and Article 17 of the Charter.
76It follows that the full property rights over the plot of agricultural land at issue in the main proceedings, acquired by CN following the deletion of GW’s right of usufruct in accordance with Paragraph 108(1) of the 2013 Law on Transitional Measures and Paragraph 94(1) and (3) of the Law on the land register in force on the date of that deletion, cannot be deemed to have been ‘lawfully acquired’ within the meaning of Article 17(1) of the Charter. Consequently, the legislation at issue in the main proceedings, under which those rights of usufruct were reinstated in the land register, cannot be regarded as being a limitation on the rights enjoyed by CN under Article 17 of the Charter.
77It follows from all of the foregoing considerations that Article 63 TFEU and Article 17 of the Charter must be interpreted as not precluding legislation of a Member State under which the right of usufruct created over a plot of agricultural land situated on the territory of that Member State which, after having been registered definitively in the land register, has been cancelled and deleted from that register by effect of legislation of that Member State contrary to those articles, must, at the request of the person who has been deprived of that right, be reinstated in that register, even when the original registration of that right was contrary to the applicable national legislation on the date of that registration.
Costs
78Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
Operative part
On those grounds, the Court (Fourth Chamber) hereby rules: Article 63 TFEU and Article 17 of the Charter of Fundamental Rights of the European Union must be interpreted as not precluding legislation of a Member State under which the right of usufruct created over a plot of agricultural land situated on the territory of that Member State which, after having been registered definitively in the land register, has been cancelled and deleted from that register by effect of legislation of that Member State contrary to those articles, must, at the request of the person who has been deprived of that right, be reinstated in that register, even when the original registration of that right was contrary to the applicable national legislation on the date of that registration.
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